All The Facts Behind Megan Thee Stallion’s Label Situation.

n a statement provided to Rolling Stone and available in part on Instagram, Megan The Stallion expressed her gratitude that the court denied her former label 1501 Certified Entertainment their request to dissolve the temporary restraining order. “I’m extremely pleased that 1501 and Carl Crawford were denied the request to dissolve the Court order and try to stop my music from being released,” the statement reads. “I will proceed with the release of “SUGA” on Friday, March 6. To be clear, I will stand up for myself and won’t allow two men to bully me. This has nothing to do with anyone else including JAY-Z, stop deflecting and trying to make this a publicity stunt. I want my rights.” Read the rest of her statement below.

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Earlier this week, Megan Thee Stallionsued her record label, 1501 Certified Entertainment. The Houston rapper alleged that the contract she signed was “not only entirely unconscionable, but ridiculously so,” and placed the label in a position to “literally do nothing, while at the same time taking for themselves the vast majority of [her] income from all sources.” On Saturday, Megan, whose real name is Megan Pete, explained her dispute with the label on Instagram Live, which sparked outrage on social media from fans as well as detractors.

“1501 don’t want me to put out no music,” Megan said on Instagram Live on Sunday. “All I did was ask to renegotiate my contract, then it became a whole big thing. When I signed, I didn’t really know what was in my contract. I was young. I think I was like 20, and I ain’t know everything that was in my contract. So when I got with Roc Nation,” — Megan announced that she was signed to a management deal with Roc Nation in September 2019 — “I got management, real management. I got real lawyers. They was like, ‘Do you know that this is in your contract?’ And I was like, ‘Oh, damn, that’s crazy — no, I didn’t know.’”

On Monday, a Texas judge granted Megan Thee Stallion, a temporary restraining order against 1501 Certified Entertainment and its CEO, Carl Crawford — the former Major League Baseball player — who first signed the Houston rapper.

Rolling Stone obtained the original contract Megan signed with 1501 Entertainment, which confirms many of Megan’s claims.

The contract, signed on February 4, 2018, began with the release of her project Tina Snow. She was given a signing bonus of $10,000 “as an advance towards future earnings.” The royalty split between 1501 Entertainment and the Houston rapper was 60/40, with all recording costs seen as “advances fully deductible ‘off the top’ prior to the distribution of royalties.” This meant that once Megan’s advance was recouped in full post-release, then she would begin to receive 40% of all future earnings. The label’s affiliated publishing company was also provided with an “undivided 50% interest in the worldwide copyright,” and was deemed the exclusive administrator of the rights to Megan’s music.

1501 Entertainment received “net monies” from a variety of Megan’s other businesses and then paid her out after a separate accounting. Throughout the contract, 1501 Entertainment is given 30% of almost all of Megan’s sources of income, including merchandising, sponsorships, endorsements, and every conceivable version of a live performance: concerts, clubs shows, hosting, and tours. In addition, 1501 Entertainment had “the sole and exclusive rights” to use Megan’s “name (both legal and professional), approved likeness, approved picture and approved portrait in any manner whatsoever, and in perpetuity” when it came to merchandising and live performances. The company was also given contract approval over all of Megan’s appearances and live performances, along with needing to “mutually agree on tour participants and the revenue split” for any artists Megan wanted to tour with outside of 1501 Entertainment’s roster.

If Megan wanted to engage in a “side artist engagement” (feature) for another musician, 1501 Entertainment received a 30% commission on services above $1,000 after “approval and permission to move forward.” 1501 Entertainment was also entitled to “a royalty of 30% of Artist’s ‘Net Royalty Receipts” derive from the exploitation of ARTIST’s services in connection with all entertainment-related endeavors,” meaning Megan’s appearances in other mediums, such as motion pictures, television, non-fiction books, magazines, video games, and more. Although, the label made sure to stipulate that it wasn’t a “Talent Agency” and “under no obligation to procure employment” for Megan.

Jordan Bromley, a partner at Manatt Entertainment who specialized in entertainment transactions, calls any company taking 30% of these ancillary income streams “a massive overreach.”

“What we require labels to do if they want any percentage of those types of revenue, is we need them to invest and participate in those businesses proactively,” Bromley explains over the phone. “They don’t just get a take of ancillary anymore. Ancillary income was a concept created when we were at our lowest. Where record labels were still spending a lot of money. God bless the labels at the time. They were the only people that were crazy enough to spend money in a down market and they got us through the downside. So I get why they needed to find income in other places, but business is booming again. The same philosophical need to help a label’s bottom line is gone, but the concept remains. You have various independent companies that are latching onto that and 30[%] is the highest I’ve ever heard.”

Across the initial Temporary Restraining Order, Megan’s representation argues that 1501 Entertainment aren’t performing the “standard record label functions (e.g. A&R, manufacturing, promotion, advertising, and accounting, etc.).” Similarly, the TRO claims that label is essentially a middleman, since they have no “infrastructure” when it comes to publishing/administration, touring, merchandising, sponsorships, or endorsements.

“You also got to look if it’s 30% gross or 30% net. If it’s gross, it’s insane. If it’s net of all expenses and commission that can make down to something like 10 or 15%, which is more in the realm of reality for ancillary takes even today,” Bromley continues. “I don’t know if they had a lawyer, but it might be something they just found online. A lot of new labels or people that are trying to get in the business, they don’t find the right lawyer.”

Initially slated for a May 2nd release — it was her mother’s birthday, who passed away just last year — Suga was supposed to be Megan Thee Stallion’s victory lap. Following this legal dispute, the timeline for Megan’s follow-up to 2019’s Fever has seemingly been fast-tracked. On Wednesday, Megan revealed the artwork and tracklist for Suga on social media, with a release date for this Friday, March 6th. The project potentially represents the penultimate release in the young rapper’s four project deal with 1501 Entertainment.

In the TRO provided to Rolling Stone, the court ordered 1501 Entertainment and Crawford, to not “to prevent the release, distribution, and sale of Pete’s new records scheduled for release on March 6, 2020,” while also ordering that Megan’s label “refrain from threating or posting any threatening or retaliatory social media posts or threats against Pete.”

In a subsequent interview with Billboard after the granted TRO, Crawford explained his side of the dispute. “We gave this girl a 60-40 split. Now go ask the artist about that. She got parts of her masters [the] first time,” Crawford said. “You think Jay-Z would have gave her part of her masters on her first deal with Roc Nation? F–k no. Then, she’s getting $100,000 a show and she don’t want to pay up. That’s what the issue was about. She signed with Roc Nation in August and decided she didn’t wanna pay me no more.”

Late on Wednesday, the judge denied Crawford’s emergency motion to dissolve the temporary restraining order, stating “the album at issue may be dropped for distribution beginning March 6, 2020.” Suga is expected to be released at midnight on Thursday.

Megan Thee Stallion’s Full Statement

I’m extremely pleased that 1501 and Carl Crawford were denied the request to dissolve the Court order and try to stop my music from being released. I will proceed with the release of “SUGA” on Friday, March 6.

To be clear, I will stand up for myself and won’t allow two men to bully me.

This has nothing to do with anyone else including JAY-Z, stop deflecting and trying to make this a publicity stunt.

I want my rights.

The facts are:

1. 1501 doesn’t want to approve my budget to put out album that the court is allowing to be released.2. 1501 tried to stop my release, I prevailed in court3. 1501 tried to fight the decision today, the court denied 1501’s request4. I don’t own my masters.5. 1501 owns 50% of my copyright and 100% of the admin rights.6. Right now, 60/40, but I’m responsible for the expenses associated to the recording.7. I can be fined if I’m late to the studio by 15018. 1501 gets 30% of my tour, merch and any activity including books, film and more, I have to cover all expenses, and 1501 doesn’t provide any services nor does it have the obligation.9. Farris is grinding with me, Carl has never spent hundreds of thousands of dollars, but all will be sorted in court.